The top estate planning tips to consider after getting divorced
This article looks at some of the most common estate planning issues raised during divorce.
Divorce is an emotional and financial upheaval and in the midst of all that turmoil it can be easy to overlook the fact that ending a marriage will also have a big impact on one’s estate plan. From wills to beneficiary designations, there are many estate planning changes that should be made following a divorce. Below is a look at a few of the most common estate planning changes that the newly divorced will typically have to consider.
Changing the will
Updating a will is usually the most obvious change to make following a divorce. Clearly, most people do not want their ex-spouse acting as the executor of their estate or to be named as an heir. As Forbes points out, a will can often also be updated to name an alternate guardian for any minor children, although typically it cannot prevent an ex-spouse from being the main guardian (unless a court deems him or her unfit to parent).
While updating a will is an obvious step for most people when they get divorced, updating beneficiary designations on retirement accounts and insurance policies often gets overlooked. As CNBC reports, just because a will has been updated to remove an ex-spouse as an heir, that does not mean that beneficiary designations on individual policies will be likewise updated. In fact, the beneficiary designation takes precedence over an estate plan, meaning that regardless of what a will says, the insurance or pension payout will go to the designated beneficiary on the individual plan.
Update powers of attorney
A power of attorney essentially gives one person the ability to make decisions on another person’s behalf. While there are many different powers of attorney, usually they cover financial, legal, or healthcare decisions. A power of attorney is especially useful if one becomes incapacitated and cannot make decisions on their own. It’s extremely important that people appoint a power of attorney who they trust. For most people, that is not going to be their ex-spouse, which is why powers of attorney need to be updated following a divorce.
Being careful about timing
Timing plays a crucial role in deciding how one updates an estate plan during a divorce. Trying to completely disinherit a spouse or attempting to remove them as a designated beneficiary before the divorce is finalized is usually not permissible. Attempting to do so could open up those estate planning documents to legal challenges later on.
Talking to an attorney
For all of the reasons described above, it is extremely important that those going through a divorce talk to an estate planning attorney as soon as possible. Divorce will raise many estate planning issues and understanding how to navigate those issues will require the assistance of an experienced attorney.